always, buddy. let mess hand this thing over to "the situation room." a danger of financial chaos. new debt talks under way after the stormiest session yet. we're now hearing that the focus of these high stakes negotiations could shift very, very soon also the fbi launches an investigation into rupert mer dock's operation here in the united states. they agree to face british lawmakers next week and get hammered with angry questions. egyptians take security into their own hands. even some children are armed with illegal guns. the revolution giving way to a wild west mentality. i'm wolf blitzer. you're in "the situation room." the united states is another

day closer to a possible default on its debts. 19 days before the deadline there's no sign that political leaders are any closer to preventen an unprecedented and frightening train wreck. right now members of congress are in the fifth straight day of talks aimed at raising the debt limit. the frustrations and tempers have been laid bare. let's go to our chief white house correspondent jessica yellin. she's over there with the latest. what do what do we expect from the negotiations? >> as you know, it's been 24 hours of extremely high tension with each side accusing the other of political posturing. now they're back to see if they can sal van these negotiations or if they have to move on to plan b, or maybe plan c. today we're told that they will tackle two major issues. first specific discussions of spending cuts. already we are told they have agreed to 1.5 trillion in spending cuts. today they'll see if they can

get that number even higher. another issue crucial to the white house. they'll discuss whether republicans will agree to any revenue increases. the president has said that is essential to any deal. if republicans won't go there, then the question on the table is, will republicans give up their determination that for every dollar the debt ceiling must be increased, there must be one dollar in spending cuts? if republicans refuse to come off that point, it would seem that from the white house and democrats' perspective, there will likely be no deal here. wolf? >> what did the president mean when he parent toll eric cantor at yesterday's session that he's ready to take this to the american people? >> the president held a series of the local interviews about to air around the country, but we did read the tweets from at least one reporter. he clearly made his case past washington directly to the american. here's what he said to one reporter, quote -- the president

expressed frustration that the republicans, quote, continue to play games. the president said he is willing to tackle his party's sacred cows, but republicans aren't. that's what he told philadelphia's kyw. clearly the president has the buildly pulpit and he's willing to use it. >> he said something very similar on month at the news conference. what is this talk of a deadline tomorrow, friday, deadline? what does that mean? >> the white house is saying they must -- these talks must yield clear progress, clear signs of steps toward a deal, and if not, then they have to move on to another solution. here is jay carney today. >> the president views friday as an important moment where we can make an assessment where we're moving toward a significant bipartisan agreement on deficit redug or not. if we're not, we have to begin looking at making sure we

fulfill our obligation to uphold the credit rating of the united states. >> reporter: wolf, if this process doesn't work, what else is there? there is the option of ledding the leaders in the u.s. senate come to their own sort of negotiated deal, and then hope that it could get through the tricky politics of the u.s. house of representatives. you know there are many freshmen who could potentially resist any type of deal. the question is, with the clock ticking, might that change as this gets down to the wire? wolf? >> we'll see with my interview with paul ryan, that's coming up later this hour. the chairman of the federal reserve hasn't been mincing words how bad things could get. ben bernanke was back on capitol hill today warning of a looming crisis that would tough almost all of us. >> in almost every area where people have pocketbook concerns -- jobs, interest

rates, credit, availability of government payments, benefits, all those things would be affected in relatively short order. >> the debt negotiations do fall apart there certainly will be a lot of tough choices ahead about who gets paid and who does not. our own lisa sylvester is talking about possible scenarios. >> i spoke to several economists who say we are in uncharted waters, we have never been in a scenario like this. come august 2nd, the united states government will no longer be able to borrow money and will consequently not be able to pay all its bills. we have a couple scenarios we can show you. let's say the u.s. government as a priority decides it will continue to pay the interest on the debt it owes, $28 billion for the month of august. it can also afford to pay social security benefits, defense contractors, unemployment sure, but automatic that take a look at what happens, the united

states will only have enough money to pay for these items here and not to pay for military active duty pay or to continue to pay federal salaries. let's say in this case the u.s. government decides as a priority to focus on safety programs, to theyty into pay on interest, so the u.s. government will continue to pay $29 billion on interest, social security payments, medicare, nutrition services. you can go down the line here one by one. what you will find is the exact same scenario, that there will come a point where you won't be able to pay defense spenders or fell salaries. so there are real tough choices. i spoke to jay powell who says there are limited appearses. >> it's funny. people want to believe the treasury department has a secret bag of tricks they can deploy to make sure the government is fully financed, and it just is not true.

>> wolf, as august 2nd is the deadline, come august 3rd -- this is a wednesday, we have 12 billion into the coffers, but $32 billion in scheduled payment. the next day is not much better. under any scenario, that is an incredible amount of money, we have $10 billion that we owe. you can look at friday, same thing, $7 billion incoming, but $12 billion out the door. i spoke to someone at the treasury department. they say the point is even if the government is able to pay the interest on the debt that it owes, that they consider it still a default if the united states golf is not able to pay federal workers. the other point they make is that it's not easy to essentially just shut down payments. the u.s. government makes 80 million payments every single month, and a number of those are electron electronic, so it's not as easy as it sounds to pick and choose

and decide you will pay, for instance, social security benefits, but you won't pay federal workers. that's going to be a real problem moving forward, wolf. >> thank you, lisa. much more coming up later in "the situation room." meanwhile, outraged lawmakers in britain have a lot of question foss rupert murdoch. will they get answers when he and their son appeared before parliament next week. why won't republicans take what they can get in debt talks. i'll ask paul ryan about this game of chicken that's making so many americans sick. [ male announcer ] to the seekers of things which are one of a kind.

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casey anthony will be released from jail on sunday. as a free woman, she'll reportedly live in a secret location, likely under a new name, and according to some reports, she's being advised to dramatically change her appearance while her lawyers are aware of how hated she is, she

may not fully understand that until she gets out. while she's been sitting in a jail cell, she's become a celebrity of sorts, getting letters of support and money from all over the country. abc news reports anthony has about $500 in her jailhouse bank account. the money has come in from at least 17 different donors since may, mostly p lly men. what a surprise. she stands to make millions telling her story, not that it would likely be the truth. the woman is a stranger to the truth. a producer associated with the jerry springer show offered anthony a million for her first televised interview. however, the show denies the offer was made to appear on that particular program. you can draw your own conclusions from some of this stuff. at some point there will be an interview, a book, a movie. she stands to become a rich woman, while the questions about what happened to her beautiful

young daughter remain unanswered. for 30 days a child is missing, and casey anthony parties. the trunk of her car later found the smell of death, human decomposition, her daughter's remains eventually found thrown in a swamp like so much trash, and a jury found her not guilty. she was convicted of repeatedly lying to police, but why would you like to police if you weren't trying to hide something? anyway, here's the question. did the casey anthony trial alter your view of the criminal justice system? go to cnn.com/caffertyfile and post a comment on my blog. if she gets recognized in public, she may hope to be back in the jail cell. >> she's going to try to disappear, i suspect, but we'll see what happens. route now ruper murdock's news outlets are being dragged deeper into the scandal surrounding the media empire. we have new confirmation the fbi

is investigating allegations of phone -- we'll go to new york, susan candiotti is standing by. news corporation, head quartered right near you in new york city. >> right down the street, wolf. the fbi calls it a high priority. today, opening investigation of the news corporation owned by media mogul rupert murdoch. a federal law enforcement source telling cnn that federal agents are looking into allegations that news corp employees or associates may have hacked into phone records or voicemails cnn has learned the scope will be brought. the fbi will be looking at anyone acting on behalf of news corp, from the top down to janitors. salary rilingenhart, who represents an organization, is among those who called on the fbi to open an investigation. she spoke with me by phone a short time ago.

>> i believe that's a criminal act. i hope there are statutes on the books now to confirm that that's a criminal act. i would hold these people accountable and responsible in a legal sense, and i think it is a crime. it's certainly a crime against ethics and against humanity. someone has to defend the dead, and the parents and the families of the victims are going to continue to do that. >> no reaction yet tonight from the man at the helm of news corporation. however, one of murdoch's papers, "wall street journal," interviewed him today. he said his company is handling the hacking scandal in his words extremely well with only, quote, minor mistakes. season any damage to the company? he said, quote, there's nothing that will 23409 be recovered. will murdoch himself be interviewed by the fbi? wolf, no telling when that could happen and no one would be surprised if the investigation took at least a year or maybe

longer. >> just to be precise, is it your information that the fbi is investigatoring news corp news organizations in england who may have been involved in wrongdoing or news organizations in the united states like fog news or "wall street journal" or "new york post"? because it's a sensitive subject. >> it appears to encompass both those things, certainly the latter since they're here in new york. >> we'll have much more late. thanks very much, susan candiotti. rupered murdoch and his so many. lawmakers have lots of questions and lots of anger. cnn's becky anderson is in london. >> it's been a long day in the life of the murdochs, never mind a long week. early tuesday we were told that they would not be appearing in

front of a parliamentary subcommittee. they've been invited by british lawmakers to account for their actions. however, later on this thursday, after being summoned by parliament, they decided they would be appearing alongside the ceo of news international rebekah wade brooks. we look forward to that. the story has developed, of course, with the media momentum for it has grown. we understand that british lawmakers can decide whether to ask them to testify under oath. if indeed they do do that and were to lie, then they would be subject to perjury laws. it's not clear exactly what will happened on tuesday. >> much more on this story coming up later. we'll speak with a former assistant fbi director who will walk us through the process. an 8-year-old boy killed walking home from summer camp.

just ahead dramatic new details about the suspect. and the latest on a deadly suicide blast at a memorial service for the afghan president's half-brother. stay with us, you're in "the situation room." thought they were dead. [ laughter ] [ grunting ] huh? [ male announcer ] should've used roundup. america's number one weed killer. it kills weeds to the root, so they don't come back. guaranteed. weeds won't play dead, they'll stay dead. roundup. no root. no weed. no problem. all your important legal matters in just minutes. now it's quicker and easier for you to start your business... protect your family... and launch your dreams. at legalzoom.com we put the law on your side. i have copd.your dreams. if you have it, you know how hard it can be to breathe and what that feels like. copd includes chronic bronchitis and emphysema.

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hi, wolf. at least six people are dead, another 15 luned waffle a mosque was blown up in kandahar. a number of official were there to remember.

a new york man has been arraigned in the murder of an 8-year-old boy missing since monday. police say they found human remains believed to be the child's in the suspect's refrigerator and trash bin. the boy, who was part of an orthodox jewish community in brooklyn, got lost and asked the suspect for direction. a tested traveler program which had ease the screening process for those willing to volunteer more details information. typically the agent only has name, gender and dave birth. the program, which begins this fall is available to a limited number of travelers, but could expand if successful. and a thrilling find for scientists in malaysia. this borniaen rainbow toad hat not been seen in the wild for 18 years. the research was part of a wider

lost amphibian search launched by conservation international. you can read more about it on our website, cnn.com/situationroom. pretty good-looking. >> beautiful little bornean toad. >> a rainbow toad. america's credit and reputation is now on the line. will either party blink in the talks on raising the debt limb limit? i'll ask an influential republican, the chairman of the house budget committee, paul ryan, here in "the situation room." many citizens are packing guns, because the police can't or won't protect them. right now, go to priceline for a sneak peek at recent winning and better than ever! hotel bids to find where you n save up to 60% on hotels. * we'll even email you other people's winning bids, so you'll know what price to name. *á with new hotel bid alerts, from priceline. >> announcer: this past year alone there's been a 67% spike in companies embracing

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online breaching in its history. also growing demand for answers from the media mogul at the center of a widening tabloid scandal now stretching right here to the united states. and what's behind a radical effort to form an entirely new state. you're in "the situation room." 19 days from now we could be experiencing a kind of financial shock and awe in this country. the president, members of -- if there's no deal to much raise the debt limit. joining us is paul ryan. mr. chairman, thanks for coming in. >> good to be with you. >> i'm sure ugetting the e-mails, the tweets, everything else, americans are sick of this fight going on in the white house. why can't this be resolved so

there won't be a crisis on august 2nd? enchts well, i think ultimately it will be resolved. there won't be a, quotes/unquote crisis. we have to duty spending and there's not a bick appetite in the white house. spending has grown far too fast. and we think it's not a good idea to raise taxes in this soft economy. yes, the president says he wants the tax increases to kick in about a year and a half's time, but the problem is when you're raising taxes on businesses they're forward-looking. if they see taxes going up even higher than already scheduled to occur, it puts a chilling effect on hiring today. the guild old days, we used to say this debt is a problem for our children and grandchildren. it's not. it's a problem for us right now. it's a hangover on our economy. look what's going on in europe. so we've got to keep our eye on the ball, and we've got to cut spending, we're negotiating spending cuts right now.

so this thing will play itself out. it's a little fluid right now. >> i want to be precise. if in fact they do reach a deal, the leadership, are you one of those republicans at the house who will theory kale vote in favor of raising the debt ceiling? >> i'm not one of those people who says under no circumstance will i vote for an increase in the debt limit. those of us who voted for budget before, debt element increases were done, that's how it used to be done. if we get a decent package, then i will vote for it. i've been saying all along, i think it's dangerous for the credit markets and the economic to raise the debt limit without any spending cuts. at the same times, nobody is looking to see it default. we have to get a down payment and that's our deficit the debt. the more we can do that, the better off our economy can be, because we can remove this huge cloud that's overhanging.

>> here's what david brooks, the mod rad conservative columnist at "new york times" wrote the other day, in a column "the mother of all no-brainers." if the republican peter were normal, they would take advantage of this amazing moment. trillions of dollars in spending cuts in exchange for a few hundred billion dollars of revenue increases. he says you should just say yes. >> that deal never came together. there were never any specifics that were actually presented to show what david brooks is talking about. so that deal never materialized. now we're off of i guess what they call the grand bargain, because the speaker and the president never came together, so now we're going back to brass tacks, which is coming up with a spending cut package. so the whole point is let's get a down payment in conjunction with raising the dead limit. will we get what we're looking for? no. we cut 6.2 trillion dollars in

our budget, the president is not going to accept that. we're not going to accept the tax increases he's asking for, sow hopefully we can get some common ground on the spending is too high and we've got to get it down. i'd like to think we can find some consensus on that area. >> if worst comes to worst would you be prepared to vote for mitch mcconnell's compromise, last-ditch proposal to avert some sort of economic collapse? >> i don't want to get into that, only because i don't think it helps us to negotiate to the media what we would take at the end of the day, but nobody wants to see a default situation. the mcconnell plan has been received more cooley over here in the house, but it wouldn't surprise me if you have combinations of approaches that come together at the end of the day. >> presumably that's what they're talking about maybe even as we speak right now. i just want to be precise on

this point. as far as the potential disaster occurring after august 2nd, with the treasury department says could be the deadline, you're with mitch mcconnell and john boehner is saying you've got to avoid that, we can't take any chances, as opposed to michele bachmann and sarah palin, you know what, it may be necessary. i watch the daily cash flows, but you can see days in august where the outflows, interest on debt, paying our troops, things like that, far compete the money coming in on that day, so on a day to day cash management we could have serious problems. we have big debt coming due that's going to be an issue. i don't president to go down that path. i want to cut spending. i've got to think we can get the president to cut some spending around here. i don't want to see default, but i think it's a mistake if we rubber stamp the debt increase,

because that would tell the credit markets these americans can't get it together. i think it would be a mistake if we just have a limit -- >> because the president, his supporters, his advisers have repeatedly said that big deal, the 4 trillion deal he wanted had at least $3 trillion in spending cuts, maybe more, and then some tax revenues. in the sense of raising the rate from 35 to 39.6%, the higher income bracket, but eliminating some of the loopholes. are you open to tax reform like that, by the way? >> not only are we open to tax reform as you describe it, it's in our budget. what we propose in our budget is get rid of these loopholes in exchange for lowered rates. general electric made a lot of

money, didn't pay taxes. and other big corporations. we have a problem here. we want to get rid of the loopholes in exchange for lowering it the tax rates, but that is not what we saw coming together with this big deal. it wasn't a 3-1. if you run the numbers the honest way, we weren't looking at 3:1. it was far different than that. i thought it was closer 2:1, 1 eeismt 1. more to the point we weren't getting the rates down. if you don't get the tax rates down, it really is a tax nick. >> how surprised were you that the president was willing to put your issue, cuts in medicare, on the table. >> well, the kinds of reforms he was putting on the table are the kinds of things you'll have to do if you don't do the reforms we're talking about. the reforms were talking about allows us not to change benefits for anybody above 55.

if you don't do that, then you will have to change benefits for current seniors. so it really is that kind of trade-off, apparently the president is more interested in going down that path. it will start price controlling. we don't think that's the bay to go. that's why we think we should rerm medicare for the younger gen jails. >> one final question -- you think there will be a deal by august 2nd? >> i think so. >> it isn't sound a resounding "i think so." mr. chairman, thanks very much for coming in. >> you bet, wolf. nice to be with you. paul ryan. the pentagon is revealing one of the worst breaching ever of computers storing very sensitive information. stand by for details. and why even some children in egypt are now carrying guns months after the revolution.

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just months after egypt's mass revolution, elation has turned to fear. parts of the country now

engulfed in crime, many people desperate for protection. here's cnn's fred pleitgen in cairo. >> reporter: we find the weapons flooding the streets. cheap, homemade guns, simple, lethal, and in high demand as security hughes deteriorated in the revolutionary turmoil. he has three pistols for community defense, he says. before the revolution, a weapon cost about $50, he says, but after that, it went up to about $150, because there were so many robberies and other crimes. as you can see these guns are very rudimentary, a single barrel. r even khalid's children are handy. he ace sures us he would only use the handguns to protect his

neighborhood. but the role of police force, seen as corrupt, has been greatly diminished. femme citizens are still taking security into their own hands. sayed owns severity major electronics stores, and says he keeps gun in all of them. >> lots of trouble on the streets. some stores were robbed. lots of stuff were taken, money, they even had like trucks to carry the gets. so far there is little improvement. he broke out of prison during the uprising when he was serving time for drug traffickinging. a crime he says he didn't permit. since the revolution, he says the guys can't touch him. he says i feel very safe among

my cousins and the people of this neighborhood. it comes as no price as khanofa supports the revolution, a weak police force that almost trusts, soaring crime, and more and more people taking matters into their own hands. fred pleitgen, cnn, cairo. will any of them come out on top? stand by. and michele bachmann now leading yet another new poll, but could sarah palin break her momentum? we'll talk about that and more in our "strategy session." what's up, smart? oh, just booked a summer vaycay. ooo. sounds pricey? nah, with the hotels.com summer sale, you can find awesome deals for places nearby. interesting... wow, i'm blown away.

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joining us is paul begala. also joining us republican strategist terry holt. guys, thanks very much for coming in. continuing as we speak. yesterday was a rough, rough session.

listen to how eric cantor, majority leader in the house, summarized it. >> he said to me, eric, don't call my bluff. i'm going to the american people with this. i was somewhat taken aback, you know, because, look, i was compromising. i said, look, i'm willing to come off my insistsant that i have always said the house will not support more than one vote on this, in the spirit of saying, look, none of us want to bring this to the brink. >> that controversial meeting with the prime minister of israel, at the end of that meeting, the president just sort of walked out, said he was going to dinner and left netanyahu, remember the reports about that? is this a president that just walks out in frustration from a

meeting like that? >> well, the first thing i thought of -- >> no, he's -- >> remember when newt gingrich lost control during the budget fights in the '90s? you knew right then he had lost control of the trajectory of how that negotiation was taking place, and i wonder if we'll look back and wonder if this is when barack obama had a moment where he lost his cool and lost control of whether he was going to win or lose this fight. >> paul? >> nice try, terry. terry nose this and wolf, you know this, a presidential meeting ends when the president stands up and walk out. others don't walk out on him. that's the protocol. the president didn't lose his cool. his's no drama obama. the truth is kantor is a bit of a lightweight, and harry reid said it. mitch mcconned clearly does, the speaker does -- >> oh, paul, the man is majority

leader of the house of representatives. that's disrespectful. >> i am being disrespectful. eric cantor is not serving your party our our country very well. and when eric cantor sits there and says no, we're going to make sure that senior citizens gets cuts in their social security, but not make corporations lose loopholes for corporate jets that's untenable. he may drive us over the cliff. >> i'll tell you what, kantor was telling the truth. for this president, the truth hurts, cutting spending is the way out and the moment he gets his arms around that is the moment we'll have a deal and we can move on. >> i want to move on to other issues, in fairness to eric cantor, paul, it's not up to you, me or terry, anyone else to decide whether or not he belongs in the room. it's up to the republicans in the house of representatives, and they elected him, right?

>> that's right. >> they did. i'm quite sure they regret that. actually john boehner, even though i don't agree with him, have purchased all quite well from the report. >> that's ridiculous. >> common, you know, he's a lightweight. >> he's been more successful than any other republican leadership team in my memory. they were able to beat your guys and nancy pelosi in the last election, there is a recipe for success there. i myself would rather have eric cantor on my right than just about any member of your party in this negotiations. >> let's move on. as someone who's interviewed, i will say this, as someone who as interviewed, i disagree. i do not think he's a lightweight. you can disagree on the substance, but to call him a lightweight, you don't get to that level of politics necessarily by being a lightweight. >> amen. >> i've interviewed him, too, wolf.

he's perfectly bright, probably marge lynnly above average for congressman, but he's no, sir up to -- the guts that it takes to make these kinds of hard decisions. that's what he lacks. >> if you say that, snen at least kantor stayed at the table. it was barack obama who walked away in a huff. >> excuse me for talking while terry's interrupting. first i thought it was mr. boehner that broke up the negotiation with joe biden. now he seems to be breaking up the negotiations with obama. it's an obvious deal, terry. democrats have to cut spending, republicans have to -- we devote into this debt, because they squandered -- >> let's move on, because we're not going to agree necessarily on this one. michele bachmann, once again, terry, you're a republican, she's leading the polls. day after day. this latest gop caucus goer's choice for the republican nominee in bachmann with 32%, pawlenty, 7%,

everybody else way down. she's really got momentum now. is she going to win iowa? >> she's certainly giving people fits that thought they were going to win iowa. tim pawlenty, the governor from the neighboring state thought he had a lock on it. a lot of other conservative candidates thought they had a leg up. but this candidate is working hard, she's well organized, she's deeply engrained into the kinds of coalitional support she's going to need in iowa. and good for her. >> right now, the only thing that's going to change that momentum, paul, is sarah palin if she jumps in. >> well, a lot of things could change it. mrs. palin, i just saw a poll recently that her negative in alaska is now up to 49, but she was doing a little better in iowa without campaigning there at all. i have no idea if she gets in or not. but i actually concur. congresswoman bachmann brings a lot of energy to the campaign, a lot of excitement. i have no idea how the

republican party sorts itself out, but it really is quite a pathetic performance by mitt romney. the millions of dllars and thousands of days he's spent in iowa and -- >> hold on, guys. we've got to leave it on that note of relative agreement between the two of you. we like to do that. guys, thanks very much. the fbi is investigating rupert murdoch's media company and there's growing sentiment for a congressional investigation as well. we have new information on how the phone hacking scandal is taking hold right here in the united states. and the pentagon declares war against computer hackers, as we learn of one of the biggest breaches yet of the u.s. military's cybersecurity. what's this option? that's new.

personal pricing now on brakes. tell us what you want to pay. we do our best to make that work. deal! my money. my choice. my meineke. has the casey anthony trial altered your view of the criminal justice system? she gets out on sunday and a lot of people not happy about how that thing turned out. reports she may wear a disguise, go into hiding. kay writes yes, it changed my mind for the better. the jury did what they're supposed to do -- put emotion, conjecture aside and weigh the actual direct evidence. there was reasonable doubt all over the case.

because none of the evidence was ever connected to ms. anthony. we can't say someone committed a murder because we don't like her. the verdict only bolsters my cynical view of the justice system. it's a system run by the lawyers, aka liars. that being the case, juries do the best that they can based on the evidence or lack of evidence they're presented. it supports the old adage that if you're guilty, be tried by a jury. if you're innocent, be tried by a judge. as a postscript, i think she's a stone cold killer. yes, what possible reason could a mother give to not report her child missing for 31 days. if you can't convince a jury of their peers they're guilty, they walk. it's a vital critical protection afforded all of us by the constitution. having said that, though, i wish the prosecutors had gone after a lesser charge, which might have stuck.

something is not right in the anthony family. we may not know what it is or how it might manifest itself on someone else in the future. carla writes no. those 12 jurors came from different background and they found there was not enough evidence to convict. even though they knew they would face incredible criticism, they did what they felt was right but not popular. we may not always get it right, but i would rather see one party go free than see an innocent woman sent to her death on popular opinion. the prosecution didn't provide proof beyond a reasonable doubt, so i guess the system worked. and by the way, those guilty will eventually pay. right, o.j.? you want to read more on this, go to my blog. wolf? >> thank you. we want to follow up right now on some very dramatic and exclusive cnn video from libya. our senior international correspondent ben wedeman and his team were caught in the mid

o oaf an intense fire fight. he later filed this report. >> this is how our day started. >> ambushed by gadhafi loyalists. >> wait! >> wait, wait! >> are you in? >> yeah, i'm in. >> there's gunfire all around us. and we believe that have gadhafi's forces are doing a round-about movement. so we are rushing out of this area. you all right, guys? everybody is fine. we're going as fast as we can. there's another car behind us? >> yeah.

the rebels took the town on the 6th of july. and then there's been talk today might be building up forces for a counterattack. and it looks like the counterattack is going on right now. >> its defenders didn't put up much of a fight. we came back to this checkpoint, about how way town between this town and we've been told we need to go back even further because gadhafi's forces are on the move and you can see, the traffic is only going back in one direction. nothing that way. this man is trying to get out with his wife and six children.

this is the result of people not being ready, he says. they abandoned their positions. they should be there all the time. we were treated to a house near zintan where we found a group of fighters preparing their weapons for ar counter attack. all their weapons were captured from the enemy. mohammad one of the fighters didn't want to appear on camera because he has relatives in tripoli, but told me local fighters from nearby villages were careless. what happened today, he says, was that nobody was watching the front. if they had, they would have seen the libyan army was moving forward. cars and pickups full of fighters gathered by the roadsi roadside. the plan, says the commander is to stop gadhafi's forces and push them back.

part of that plan was to pound the loyalists with rockets. and then move forward and they were able to take the town. but rockets keep coming in. as well as the occasional incoming bullet. near 30 rebel fighters were wounded in the battle. at least eight were killed. all to gain control of the town it captured a week before. of. >> and you're in "the situation room happening now. crisis on a new front for rupert murdoch and his media empire. the fbi now said to be investigating alleged hacking of 9/11 victims. stand by for new information. and also, a new round of debt talks over at the white house this hour. we're learning new details of what's happening behind closed

doors. plus a glimmer of hope in the u.s. senate. and a plan to split california into two states. we'll meet the man behind the controversy secession drive. we want to welcome our viewers in the united states and around the world. breaking news, political headlines and jeanne moos straight ahead. i'm wolf blitzer. you're in "the situation room." the hacking scandal plaguing rupert murdoch evening business is now spreading to his u.s. media empire. a law enforcement source telling cnn the fbi has now launched an investigation into murdoch's news corporation. the probe focussing in on allegations of hacking into phone conversations and voice mail of september 11 survivors, victims and their families. skr nn's brian todd is working on the story for us. brian, a major new development today. what's going on here? >> wolf, the pressure on rue better murdoch and his news

corporation is growing more intense in the u.s. overall right now. we've spoken to people on capitol hill today, and more members of congress are agitating for murdoch to answer to them as well. from capitol hill to the fbi, murdoch and his news corporation are facing the prospect of much more scrutiny ahead. >> a law enforcement source tells cnn, looking into rupert murdoch's news corporation is now a high priority. so high, the source says, the fbi has already launched an investigation. the source says the probe is focussing on allegations that murdoch's employees or associates may have hacked into phone conversations and voice mail of september 11 victims and their families. anyone acts on behalf of news corporation is being looked at, the source says, from the top down to janitors. democratic senator frank lautenberg also believes news corporation violated federal law against bribing officials in foreign countries for information. >> would you want to hold hearings and call mr. murdoch or his executives?

>> certainly that would be a serious consideration. awaiting now a return from the justice department. >> in canvassing capitol hill, with eeve learned of growing sentiment for congress to delve into the activities of rupert murdoch and his journal iss. most of those calls are from democrats. murdoch is a big backer of republicans. if more momentum builds for probes into possible hacking in the united states or even congressional hearings, there are cautionary tales for lawmakers, reports that tabloids sometimes turntables for those who investigate them. most of those accounts date back to well before the scandal blew back in the media in recent weeks. media standards trust tells us when british parliamentarians look into the tabloid press a couple of years ago, he heard allegations that they were discouraged from repeatedly inviting rebecca brooks, one of murdoch's top execs to receive. >> the allegation was they were told, members were told do not invite her again. do not press this one, do not push it because if you do,

you're regret it. and that was made very clear to them. >> reporter: contacted by cnn, a news corporation spokeman would not comment on that allegation. >> are you concerned they might hit back at you, dig into your personal life or whatever? >> i'm not worried about my personal life nor am i worried about my next term. i've been here 27 years. when you grow up in a poverty-stricken area, poverty-stricken household, you develop a thick skin. i don't scare that easily. >> a news corporation spokesman would not comment when we asked about the possibility of congressional hearings and would not comment on the fbi investigation, but in one of his first interviews on the scandal, rupert murdoch chose to speak to the wall street journal which he owns. he defended h eed company's han of the crisis and vowed an independent committee to investigate every charge pft. >> if his company which is

headquartered in new york city is violated to have have broken the law, could it be fined? could it be shut down snp what's going on here? >> well, on whether it could be shut down, legal experts are at odds over that. some say if the justice department carries this through completely and a court eventually finds news corporation broke that anti-bribery law, then the fcc could revoke their license, but they've never heard of a case of that happening. sometimes it results in fines and jail time, but not of a company shutting down. that's a long way down the road. >> let's dig deeper. thanks, brian. the former assistant fbi director, tom fuentes, tom, explain what's involved. when we get the word the fbi has now begun some sort of investigation or probe into the murdoch empire. >> right now, wolf, based on the fact that so many public allegations have been made about that company and the fact that the company operates in the u.s.

as well, the fbi has begun what it's calling a preliminary assessment. it's kind of nuanced to say it's not a full-blown investigation. but the reason is that there's been an abundance of accusations. you know, there's been an abundance of smoke, if you will. now they're going to look and see if there's an actual fire. so far there's not been a substantiated allegation to show there has been criminal activity in the u.s. but that's what they'll be looking into. >> so the allegation is that someone working for murdoch's empire may have illegally broken into the voice mail, hacked into the phones of victims, survivors, family members from 9/11. i guess that would be a crime, right? >> right. but basically, if news corp's subsidiary companies in london did these activities, then the assumption is, well, maybe they were doing it in the united states as well. now private investigators come forward and said that he was approached after 9/11 to hack into victims' voice mail accounts, but he didn't report

it to the authorities then. i don't think there reese any way to substantiate that. the only way it could be substantiated is if a reporter actually says yes, i was involved in it or my colleagues were involved in it and provide additional information. >> what's the jurisdiction of the fbi. news corporation is an american-based company, but most of the allegation, almost all of the allegations are some subsidiaries that it has in london, in i think land. so what's the fbi's involvement? >> well, right now the london office of the fbi, working with its counterparts from scotland yard and the other authorities is basically monitoring their investigation to see whether or not news corp itself was involved in the allegations of the bribery. the fact that you have subsidiary companies of news corp doesn't necessarily mean that the executives themselves in fluz corp knew that this hacking was going on in london. >> other officials or a

subsidiary of news corporation, that would be a skriem in tcrim sgliets. >> not necessarily. if those subsidiary companies are based in the uk, they're not going to necessarily be subject to the jurisdiction of the united states. news corp is traded on nasdaq so it's considered a u.s. corporation. if they were involved and knowledgeable of bribery of public officials in the uk, then that would be in violation of the foreign corrupt practices act. that's a felony that could be prosecuted here in the united states for that. >> very quickly because we've got to go, but you sort of wish you were still in the fbi to be investigating this kind of case? or would you just as soon let someone else do it. >> wolf, i always wish i was in the fbi. >> the attacking scandal underscores concerns in the pentagon, taking the threat very, very seriously right now. unveiling new plans for

potential cyberwar, as well as a massive recent cyber breach. what's going on? >> wolf, indeed today, the first news of a massive breach of military cybersecurity. even as troops are getting to use their smart phones and i pads in the middle of the next fight. >> but modern communications are risky. the phone hacking scandal in britain, just the latest example of today's vulnerabilities. top officials revealed one of the worst breaches ever. indeed in a single intrusion this past march, 24,000 files were taken. it was done rewe think by a

foreign intelligence service. a nation state was behind it. >> reporter: cyberspace is now a potential war zone spp. >> cyberattacks will be a significant component of any future conflict. whether it involves major nations, rogue states, or terrorist groups. >> reporter: in 2008, an infected flash drive was inserted into a lab top on a u.s. military base. a foreign spy agency had placed a malicious code on the drooive transferring secret data to foreign control. for the first time a foreign government had a cyberbeachhead. the new pentagon strategy focuses on defending many ill tear systems from theft and denial or disruption of service.

>> in the event of a devastating attack in military cyberspace, the president could order a conventional counterattack using missiles or bombs. but at least one seep yor officer says even the more mundane phone hacking scandal is still concerning. >> it does worry me. more from the standpoint that to date industry in the sense that we use in our displays, the chip sets that we news use in our phones are not currently con figured to encrypt. we're going to have to start thinking our way through as a nation. >> and if you're wondering, wolf, the pentagon would not say which country it thought was responsible for this latest massive security breach.

>> a lot of people guessed. thanks very much, appreciate it. as the u.s. inches towards possible, possible default. one economist is warning that tough choices will lead to public outcry. is the united states heading down the same path, though, as greece? plus, who's really leading republicans in the debt talks. we have new details of tension and intrigue behind closed doors. stay with us. ♪ ♪ ♪ ♪ introducing purina one beyond a new food for your cat or dog.

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jack cafferty is here. >> operating in an underperforming economy could be affecting our health. a new study released by researchers in spain found that working for more than 40 hours a week leaves employees six times more likely to suffer long-term exhaustion or irritability. or a lack of interest in their work and nonwork lives. something called burnout syndrome. some of us have been suffering from it for years. workers who feel underchallenged on the job, left to do what they feel are brainless, monotonous tasks, also at risk of developing this burnout syndrome. so are people who have stayed in the same job too long. those with more than 16 years service in the same position, five times more at risk of developing burnout syndrome than colleagues who have been at the job for four years or less. with the economy in its current state, it's no surprise this is a growing problem. it has the potential to become an epidemic.

having a family, partner or spouse to go home to at night helps with burnout. i guess there's some benefit to be able to go home and complain with someone. but where does it end? careers are getting longer, retiring at 65, not even an option for many of us anymore. with 9.2% unemployment in this country, those of us who have a job are lucky to have one and some of us need to work more than one job just to pay the bills every month. so here's the request e. do you feel like you're a member of the burnt out generation? go to cnn.com/caffertyfile. >> the deadline to extend the debt ceiling is approaching. our next guest is well known to many of our viewers. what do you mean even if there's a resolution right now it's not

going to solve the problem? >> government spending is up $1.1 trillion over the last four years and they're talking about cutting $250 billion a year. there's a lot more working to done and moody's made it clear, even beyond this deadline, they expect to see a deficit reduction program in place or we're getting downgraded come next year? >> you think that's going to happen? >> i would bet we are going to be downgraded because by next year, i think there will be a csignificant risk that at some point, the united states will have to take measures to make their bonds worth less. >> do you think there will be a deal between now and august 2? >> yes, i do. the stakes are too high. if there's not a deal, there's leverage to pull. remember, the president said no deal by saturday, we'll have to start looking about ensuring that we don't default. >> so our viewers who are on social security right now, they can expect, you believe after august 2, they will get their checks on time military veterans will get their benefits on time. everything will be business as usual, at least in the short

term is, that what you're saying? >> i don't know that it will be on time. there may be some legs. you might get a check two days late. it's kind of hard to delay things with all the electronic payments we have, and the money might not come in as quickly as we need, but i do believe the u.s. government will not shut down. >> how important is it from your perspective, and you're a professor of business, is it to reform the tax code so some of these loopholes, these exemptions, these subsidies for big business and others simply go away and there's more of a level playing field. >> we have a more rational tax code. i'm a fiscal conservative, but we need to not only cut spending, we all need to pay a bit more taxes to get out of this mess. >> so when you say the tax code, for example, general electric which didn't pay any federal income tax last year even though they made $14 billion, you would have them at least pay something? >> i think they should pay a third of that in taxes. . >> 33% as opposed to 35%. which is the highest rate. >> maybe that's a bit high, but given what everybody else is

paying, they should certainly be paying $10 billion, $15 billion. >> and some hedge fund managers, paying at 15% as opposed to 35%, that's a mistake, too. >> that is ridiculous. that must be fixed. >> people are going to have to work on a lot. >> what about the age of retirement? >> it really should be 70. >> 70? people work hard. they want to retire at 67. >> we can do our jobs as effective li as 70 as people 30 years ago did at 65. perhaps more so. >> thank for coming in. a plunge in the number of foreclosures sounds like good news. but wait until you hear the fine print. the numbers don't lie. we'll tell you the whole story. and southern california sometimes seems like a different planet. so it's no surprise people there, some of them, at least, are talking about making it a new state and not including los angeles. we'll tell you what's going on

right here in the situation room.

lisa sylvester is monitoring some of the top stories in the situation room right now, inyou had colluding a deceptive fall in the number of some foreclosures of homes here in the united states. what's going on? >> that's right. the number of foreclosures plunged in the first six months of this year, but analysts say a party would be premature. that's because banks still have loads of repossessed homes. they've also slowed the pro-sedsing of foreclosures to make sure they have their paperwork in order and those are likely to prolong the average slump. the average time to process a foreclosure now is 318 days. a judge declared a mistrial in

the case against the former baseball pitcher. the judge said the jury heard statements in a prosecution video that were inadmissible until later in the trial. he said a september 2 hearing on whether to try the case. clemens is accuse of lying about his alleged use of steroids and human growth who are moans. dr hormone. penny-sized hail pelted planes, leading to around 1,000 people being strand there had. wisconsin's governor was among the crowds forced to defend for themselves at the airport. and for one meal, space fans had the chance to eat like astron t astronauts. nasa invited them to share what they call an all-american meal today with the crew of the space shuttled a atlantis. the meal featured grilled chicken, or beef bris kit,

deserve was, what else, apple pie. it's hard to believe the shuttle program about to be over. >> yeah, it's amazing. i'm hungry just hearing about that menu. >> warnings of a possible u.s. debt default are growing more dire. listen to this. >> i think it would be calamitous outcome, create a very severe financial shock that would have effects not only in the u.s. kma kmi beconomy but t economy. >> white house talks are filled with tension and intrigue. new deals just wrapped up today. and the latest casualty of minnesota's government shutdown. we're talking about beer. this past year alone there was a 93% increase in cyber attacks. in financial transactions... on devices... in social interactions... and applications in the cloud.

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here's a revealing moment. the house republicans talking to reporters about debt ceiling negotiations, but when it came time for questions, who did the first question go to? it wasn't the speaker of the house john boehner, instead the majority leader, eric cantor. perhaps a telling sign of what's going on. let's get a little bit more on the talks. maybe a glimmer of hope on the senate. our congressional correspondent kate baldwin is standing by with the latest. what are you hearing? >> hey there, golf. well, jay carney cautioned today

not to expect a hallelujah moment from today's meeting. we did just hear there's not a meeting planned tomorrow from the white house. maybe that's because the final way out may be coming from up here. >> the federal reserve chairman on capitol hill repeated his stern warning that default could cause chaos. >> we created a very severe financial knock that would have affects not only in the u.s. economy but the global economy. >> and the obama administration's top money man flanked by senate democrats reminded lawmakers of what's at stake. >> we looked at all available options and we have no way to give congress more time to solve this problem and we're running out of time. and the eyes of the country are on us. >> despite the ominous words, talks are stuck and the finger pointing continues. >> if the president wants to threaten seniors or veterans or rattle the world economy by

pretending he can't pay our bills. he, of course, can do that. but he's not going to implicate republicans in these efforts. >> democrats singled out the number two house republican eric cantor, even calling him, quote, childish. of. >> leader cantor has yet to make a constructive contribution to these discussions. more than anything else, he is holding up an agreement at this point. >> meantime, top republican leaders sought to present a unified front thursday amid talk of a rift between cantor and house speaker john boehner, leading to one of the lighter moments of these negotiations. >> let me just say we have been in this fight together, and any suggestion that the role that eric has played in those meetings has been anything less than helpful is just wrong. >> and as the heatings continue at the white house, it could be, if there's a light at the end of the tunnel, it's on capitol hill.

mitch mcconnell and harry reid might be trying to work something out. >> we're going to have to look at other alternatives and his is one of them. >> now, it is a complex plan that would allow the president to raise the debt ceiling, but also allow congress to disapprove of him doing so, to vote against it. it may also include a commission that would recommend spending cuts and could include some of the cuts already discussed. john boehner said in the absence of anything else, it's a worthy option. >> who are the democrats who called eric cantor childish? >> probably someone you heard of before. that would be the senate majority leader harry reid. blooufs are off, wolf, in terms of rhetoric around this.

>> obviously he's getting on their nerves a little bit in these negotiations. let's get more now with david gergen. he's joining us, as well as gloria borger. who's really leading. >> you're talking about eric cantor. it started out, wolf, that john boehner, the house speaker and the president were meeting together alone to try to and come up with some grand bargain. that's gone. a seen yoer official said it is eric cantor doing all the talking, all the talking in the meetings. he said i think mitch mcconnell says hello and goodbye and john boehner says nothing. it's very clear from what occurred yesterday and what we're hearing today is that the white house is a little bit frustrated by mr. cantor. >> if there's no deal, david,

who gets the blame? >> everybody is going to get the blame. especially if with ego into default. there's going to be huge anger at the incumbents in both parties. the republicans will pay a heavy price because the president has, you know, in effect staked out a high ground in terms of the argument. but at the end of the day, it's the president who usually suffers and suffers the worst if the economy suffers. >> the president doesn't want to continue talking about the debt ceiling. he has other messages he needs to talk about. he needs to talk about jobs. there was a couple of polls today where 67% of the americans say they want a deal to raise the debt kreelinceiling. that includes taxes on the wealthy as well as spending cuts. so it seems politically at least, the white house argument may be taking hold right now.

>> let's wait and see here. the president still bears the ultimate burden if things break down. pi do think it's time for a truce. there are the element os of a deal here, partly drawn on mcconnell's plans, partly drawn on what boehner has done. what we know from the past is those white knuckle moments, the politicians look so dysfunctional, but at the end of the day, when the country is at stake, it comes up with something. it's going to be farless than what we need as a country, but i do believe we will not default. >> i spoke in the last hour with paul ryan, the chairman of the house budget committee, unlike some of the real tea party activists who say they will not vote in favor of any legislation that increases the debt ceiling, he says he would vote yay, he would vote in favor if it were a good deal. >> right. i think there's this question about whether you consider these loophole closures new revenues.

that's sort of the key here. and i think there's a lot of those freshmen republicans, 87 house republicans who took a -- all of them took the pledge not to raise taxes. when i spoke with a senior administration official about it today, from observing these talks, he said to me, it looks to him like the tail is wagging the dog. this is what happens when you're sitting on top of a tidal wave that you didn't create according to one. >> back in 2006 when the republicans were in the majority, president brush was in the white house. they had a 52 to 48 vote to raise the debt creting in the united statesenate. all the democrats voted against raising the debt ceiling, including then senators barack obama, joe biden, hillary clinton, harry reid. they all voted against it. all of the republicans except three voted in favor.

you know, you see that kind of vote then, what's going on now, the rhetoric, very similar then except the republicans are saying what the democrats are saying now. you can't help but become a little cynical when you see what's going on in washington. >> well, i think that's actually right, wolf. we haven't come this close before. we often voted to raise the debt ceiling under democrats and republicans. but haven't come this close before to default. a and the warnings coming up before around the world, not only from bernanke and moody's, but china. china owns $1 trillion in u.s. china, as you know. they say you dare not go into default. i somehow think that we're going to stop just short of that. >> check out the blog, i've got some in there. and the rhetoric is amazingly similar about default.

check it out. >> look forward to reading it. >> gloria, thank you very much. >> sarah palin has some advice for republicans negotiating the debt ceiling with the white house. hear what it is, that's coming up. and screamly ridiculous is what the governor's office calls it. but could part of california actually become a 51st state?

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questions about the debt kreeling are relentless for the republican presidential candidates. some are cagey, dodging the question whenever they can. others are insistent that they would never vote -- they would never do anything to raise the debt kreel on their watch. -- ceiling on their watch. it's interesting how they're dealing with it. >> that's right. it's easy to make those kinds of statements when you're not in the seat of government, having to make those decisions. but from drawing lines in the sand, wolf, to campaign video slamming any talk of compromise. the republican field for 2012 is jockeying at this point to see who can take the toughest line on the debt ceiling. >> accused by democrats and a few of his republican rivals of taking a low profile on debt talks in washington, mitt romney has now hit the kreeling. -- ceiling. >> the president to agree to cut federal spending cap federal spending and put into place a

balanced budget amendment. that's the answer. that's the line in the sand. >> nearly all of the declared and potential candidates are ratcheting up the rhetoric with sarah palin returning to one of her controversial catch phrases. >> we cannot default but we cannot afford to retreat. this is not the time to retreat. it's time to reload and we reload with reality. >> michele bachmann accused them of a misnomer. >> if congress fails that somehow we will use the full faith and credit of the united states. that is simply not true. >> a few hours after bachmann's comments, the powerful moody's investors service announced it was reviewing the aaa bond rating for the u.s. who do you trust, bachmann or ben bernanke? the chairman of the federal reserve? >> i think it would be calamitous outcome.

>> ron paul released a new movie trailer-like tv ad warning past compromises with democrats only brought higher taxes. >> the past brought more compromise, more broken promises and more new taxes. >> the ad doesn't mention that during the '90s, president bill clinton balanced the budget after raising the taxes. a new poll finds just 25% want only spending cuts as part of a debt deal. 67% would increase taxes on wealthy and corporations. that won't fly with the current gop candidates who have all signed pledges no the to raise tac taxes, except for john huntsman. still, any republican accused of playing politics can just point to the president who voted against hiking the debt ceiling. >> that was just an example of a

new senatoric maing a political vote as opposed to what's important for the country. >> besides bachmann, hall, the rest of the gop deal doesn't have to cast a vote on the debt ceiling and that's a luxury a lot of politicians in washington would like to have right now. >> thank you very much. you're going to be a busy guy in the next several months. and years. thanks very much. >> the gieunited states has two dakotas, two carolinas, two virgin virginias. now there's a push to add two californias. details of a secession drive that would split the golden state into two. >> reporter: you real . >> you really have to try hard, you really have to be an idiot to screw up the state of california. >> we have hit a nerve with citizens who are just fed up with businesses a usual in the state. >> you want to secede the state of california? i sure hope you don't want to be governor. >> reporter: it's this kind of

citizen outrage in california that's fuelling one of the most radical political ideas to recently surface in the golden state. >> i'm talking about a secession plan from the state of california. >> that's right, a 51st state called the state of southern california. a county supervisor jeff stone says secession may be the only way to get riverside county and 12 other largely politically conservative counties back on track. >> what the state has done is they' been balancing their budgets on the backs of our local coffers. they' been stealing our sales tax, property tax. >> he says the states have turned his back on his constituents who have been hit hard by a tough economy. >> the bottom line for me and my constituents is jobs. we are sending jobs out of the state of california by the train load. we have some areas of thf county that have 25% unemployment. the average in riverside county is about 15%. foreclosures, we are the foreclosure capital of the world. >> reporter: if the state won't work with local government, stone says he'll rally the troops to part ways. >> insanity.

i mean, this is -- this is major surgery where maybe we need a band-aid. >> reporter: this political science professor says secession will cost a fortune to take to the voters. >> it takes millions of dollars to get the signatures necessary to put up an initiative. >> he hasn't addressed the cost, the establishment of a new government. where are we going to put the capital. disneyland? >> even when you came up with this idea of secession, you had to have known this was a radical one for which you would be criticized. >> listen, i knew i would be criticized. i've learned in my tenure of being a public official for 19 years that sometimes you have to do some pretty outrageous things to get people's attention. now listen, i' not discounting the fact that secession is a possibility. >> reporter: judging by this

pile of e-mails jeff stone showed me overwhelmingly in support of his idea, he may have hit a nerve with disenchanted caliifornians. so what's next for the proposed state of southern california? well, riverside county will hold a summit and invite locally elected leaders throughout state to try to come up with some kind of solution. now supervisor stone says if that doesn't work, he's going to take the issue to the voters who have heard it all before. at one time, the states of western california and coastal california were proposed. different regions have tried to secede from the state at least 27 times since the 1800s to no avail, wolf. >> intriguing idea. we'll see what happens. thank you. >> the governor and the republican state leaders just emerged after a three-hour meeting to say the basic frame work of a deal had been reached and a shutdown would end within

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get right back to jack for the cafferty file. >> the question this hour is do you feel like you're a member of the burnt-out generation? cheryl in south carolina. definitely. i'm lucky enough to have a recession-proof job, but i'm working much longer hours for less money than i made ten years ago. we're almost $50,000 upside down on our mortgage and there's no

relief in sight. burned out so one way to describe it. c.w., stomped on, run over, short changed, media manipulated, marginalized, confused, lieded to, marketing targeted sensory overloaded trivialized and yes, burnt out. peggy age 64 and yes did everything right. worked hard, raised a family, paid the mortgage paid the taxes. for that effort i now feel like a hostage to the nonsense going on in washington, d.c. and i feel like i have to spend my time worrying about the collapse of my government. i'm tired of seeing the powerful run rough shod over the rest of us. i'm so sad for this country right now and so worried about my children and grandchildren's future. mark in oklahoma city write, i'm a teacher. i love working with kid, i love to teach and i'm tired. i'm not that old and i won't be able to retire for ten more years at least. it's sad for me, my student,

even my dog who notices i'm just not the same lovable happy person that i once was. that was a great question to ask. i hope you don't get burnt out any time soon. your segments often give me something to smile about. jim in colorado, burned out with work, trying to stay a step ahead of the bill collectors, you bet ya. i'm working hard but wage stagnation and increased costs are eating my lunch financially. i wish the politicians would realize the middle class need a little help out here and that the 2% need to share in the pain we're all feeling. curtis in philadelphia write, wow, deja vu, jack, it's like you're my guidance counselor and it's 1981 all over again. total flashback. you want to read more, go to the blog, cnn.com/caffertyfile. wolf? >> thanks very much, jaf. good question. jaf calf either we the cafferty file. when the full faith is on the line. the mockery, the teasing and the

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[♪...] >> male announcer: now, for a limited time, your companion flies free, plus save up to 65%. call 1-800-sandals. conditions apply. here's a look at the hot shots. in spain a bull is chased into the sea as part of a festival tradition. the bulls are then brought back to land by boat. in the philippines a horse zebra

hybrid grazes on grass at the zoo. in england, a man jumps off the top of a harbor wall into the sea. and in france, fighter jets fly over the louvre in celebration of bastille day, an important day in the history of the french revoluti revolution. things can get nasty when you're talking about trillions of dollars in debt. cnn's jeanne moos looks at the low lights of the debt talk ceiling that's going on. >> reporter: we are indebted to the debt ceiling for making our politicians testy testy. >> president obama quit lying. >> i think mitch mcconnell frankly has lost his mind. >> and you think this mess started 18 months ago? no, it did not! >> reporter: a democrat gets fiery. a republican walks her back. >> i think we need to get the space shuttle to retrieve that thought process.

>> reporter: these politicians aren't even the ones stuck in the room where the debt talks are taking place. since cameras aren't allowed in the negotiating room, we can only imagine the annoyance, the exasperation, the tension. >> temperatures began rising. >> debt negotiations turning nasty. >> an angry president shoves his chair back and walks out. >> seems like the president had, well, a hissy fit. >> almost came to blows. >> reporter: almost came to blows? that's almost as overblown as comparing the debt talks to the real housewives of new jersey. >> [ bleep ]. >> theresa certifiably crazy out of her mind. >> reporter: remind you of anything? >> i think mitch mcconnell has lost his mind. >> reporter: mcconnell's raise the debt ceiling plan got bashed by both sides. >> it's called el foldo. >> reporter: and the president got compare fod a popeye

character. >> he reminds me of the cartoon character wimpy where he said. >> i will gladly pay you tuesday for a hamburger today. >> reporter: this has literally become a food fight. >> we might as well do it now. eat our peas. >> tell us to eat our peas like bratty little kids. >> i got a big plate of peas and i ate all my peas. >> speaker boehner said dealing with the democrats is a lot like dealing with jell-o. >> slippery, slidy. >> if you mix peas in it -- >> reporter: never mind the debt ceiling, just be glad there's no blood on the ceiling unlike al ko poen in "the untouchables." >> i get nowhere unless the tam wins. >> reporter: may the politicians at the debt talks take a bat to the budget. jeanne moos, cnn. new york. >> that's it for me. thanks very much for watching. i'm wolf blitzerin